04-287 •
•
Resolution No. 04-287
RESOLUTION
AUTHORIZING THE CITY MANAGER TO ENTER INTO AGREEMENTS
WITH PROVIDERS OF ELECTRICAL SUPPLY AND GAS SUPPLY SERVICE
AS THE MARKET DICTATES FOR COST SAVINGS
WHEREAS, the City of Elgin has completed an audit of the city's electrical and gas utility
accounts; and
WHEREAS,the electric and gas utilities are open to competition and as a benefit to the City
of Elgin to change providers as the market dictates to obtain better pricing for the services; and
WHEREAS, the pricing for electrical and gas utility services can fluctuate and once a cost
savings is identified agreements for same need to be executed in a timely basis to lock in lower rates
for the services.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
ELGIN, ILLINOIS, that David M. Dorgan, City Manager of the City of Elgin, be and is hereby
authorized to review market pricing for electric and gas utility services to be provided to the city and
if market conditions provide better pricing for such services for the City of Elgin to enter into
agreements with electricity suppliers and gas suppliers on behalf of the City of Elgin to provide such
electrical services or gas services for the City of Elgin.
BE IT FURTHER RESOLVED that this resolution shall be in full force and effect for ninety
(90) days from the date of the adoption of this resolution by the City Council.
s/Ed Schock
Ed Schock, Mayor
Presented: October 27, 2004
Adopted: October 27, 2004
Omnibus Vote: Yeas: 6 Nays: 0
Attest:
s/Dolonna Mecum
Dolonna Mecum, City Clerk
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City of Elgin Agenda Item No. \K
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October 8, 2004 G n. 011itjtt
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TO: Mayor and Members of the City Council
FINANCIALLY STABLE CITY GOVERNMENT
EFFICIENT SERJK ES
AND QUALITY INFRASTRUCTURE
FROM: David M. Dorgan, City Manager Y`
James R. Nowicki,Fiscal Services Director
SUBJECT: Electric and Gas Utility Audit
PURPOSE
The purpose of this memorandum is to provide the Mayor and members of City Council with
information to give the Fiscal Services Director the authority to change the providers of electric
supply and gas supply service as the market dictates for cost savings.
RECOMMENDATION
It is recommended that the City Council provide authority to the Fiscal Services Director to
change providers of electric supply and gas supply service as the market dictates for cost savings.
BACKGROUND
On July 24, 2002 the City Council approved a contract for an audit of the City's utility services
by Troy & Banks as a cost savings initiative. hi May 2003, Troy & Banks, as a result of their
audit, advised the City that a refund of$40,814.40 was due from SBC/Ameritech for past billings
on telephone circuits/lines that were no longer in use. Along with annual billing savings of
$23,527.20 the City experienced total savings of $41,822.04 net of the payment to Troy &
Banks.
Troy & Banks has since focused their audit on the City's electric and gas utility accounts which
includes electricity for the street lights throughout the City as well as the electricity and gas for
all City owned buildings. Similar to the telecommunications industry, electric and gas utilities
are open to competition and it is to the benefit of the City to change providers as the market
dictates better pricing for these services. Pricing can fluctuate and once a cost savings is
identified, agreements need to be executed on a timely basis to lock in the lower rates.
With the implementation of the recommendation, ComEd (Commonwealth Edison) will continue
(Pik to deliver the electric to the City of Elgin. The only change will be with the company that
provides the supply of the commodity to the City.
Based on their audit, Troy & Banks has recommended that the City change our electric supply
service to MidAmerican Energy Company to obtain the best possible electric supply price, terms
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Electric and Gas Utility Audit
October 8, 2004
Page 2
and reliability. The following immediate benefits are offered through this recommendation:
1. Approximate savings of$61,000 for seven (7) months (November 2004 through
May 2005);
2. The term of the agreement is seven (7) months; and
3. The electric supplier is a dependable, reliable and a proven provider.
MidAmerican Energy Company distributes electricity to 690,000 customers of
four Midwest states and is headquartered in Des Moines, Iowa. Berkshire
Hathaway and other investors own the company.
In addition to potential savings on commodity prices, other benefits include no long-term
contract or enrollment/switching/exit fees.
Additionally, Troy & Banks may recommend that the City change our gas supply service and is
in'the process of researching pricing.
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
None.
((.1)11/uFINANCIAL IMPACT
There is no additional expense for changing electric supply service. A projected total savings of
approximately $40,000 is estimated for the seven-month period net of the payment to Troy &
Banks of 35% of savings. The savings for changing gas supply service has not yet been
determined.
\JNVtEGAL IMPACT
Review supplier agreement with MidAmerican Energy Company for electric supply. Review
supplier agreement for gas supply service once a company has been identified.
ALTERNATIVES
1. Approve authority for the Fiscal Services Director to change providers of electric supply
and gas supply service for the City.
2. Do not approve authority for the Fiscal Services Director to change providers of electric
supply and gas supply service for the City.
Respectfully submitted for Council consideration.
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